By Nima Haghpanah, Aditya V. Kuvalekar, Elliot Lipnowski
American Economic Review | August 2024
Kuvalekar, A., Haghpanah, N., Lipnowski, E. (2024). Buying from a Group. American Economic Review, 114(8)
American Economic Review, August 2024
A buyer procures a good owned by a group of sellers whose heterogeneous cost of trade is private information. The buyer must either buy the whole good or nothing, and sellers share the transfer in proportion to their share of the good. We characterize the optimal mechanism: trade occurs if and only if the buyer's benefit of trade exceeds a weighted average of sellers' virtual costs. These weights are endogenous, with sellers who are ex ante less inclined to trade receiving higher weight. This mechanism always outperforms posted-price mechanisms. An extension characterizes the entire Pareto frontier.
Aditya Kuvalekar is a microeconomist whose primary research area is information economics. His research examines how changes in information environments shape individual and collective behavior, with applications ranging from protests and voting to interactions within organizations. A second strand of his work focuses on market design, including problems of land acquisition from groups and school choice when students have non-standard preferences. His research has been published in leading economics journals, including The American Economic Review, The RAND Journal of Economics, American Economic Journal: Microeconomics, and Journal of Economic Theory.
